Hang on to your hats - the US stock market seems headed for more late spring storms with no end in sight.
"This market wobbles, it stumbles, it meanders. The market is all over the place right now," and it's not exactly pretty, says investment guru Greg Nie of Everen Securities Inc. in Chicago.
Investment experts looking for calmer weather see something else instead. They predict a slowdown in second-quarter profits; continued Asian woes; Russian market turmoil; and record US employment that could eventually trigger inflation.
The question in the financial community is whether the long boom in the stock market is on the verge of a correction or merely pausing on the way up.
For 1998, the 30-stock Dow Jones Industrial Average and broader market Standard & Poor's 500 Index are up more than 14 percent.
But the Dow has stalled around 9000 since April. Market swings have come fast and furious, and more stocks are headed down than up.
"We're seeing a lot of sharp declines" in a variety of sectors as investors search for industries that could be profitable, Mr. Nie says.
It looks like what many analysts are calling a "rolling correction."
One sector after another has taken sharp hits, including financial firms, technology companies, and the stocks of small companies.
Even prominent blue chip firms have not been immune. Richard McCabe, chief market analyst at Merrill Lynch & Co., estimates that over half the stocks in the S&P 500 have slipped 10 percent or more from their highs this year. A decline of 10 percent is generally defined as a market correction.
"Some days all sectors are getting whacked at once," says Ralph Acampora, chief technical strategist for investment house Prudential Securities. "The Dow is off 3 percent from its high this year. But that doesn't begin to tell what is happening.
"The Russell 2000 index [which measures smaller company stocks, including many high-tech firms] is off 9 percent from its high. Selectively, this is a very dangerous situation, which I call a 'stealth correction,' " says Mr. Acampora. The overall impact of the downturn, in other words, is somewhat hidden by momentary upswings in market indexes, he says.
Still, he sees calm returning to the market in the months ahead, with the Dow hitting 10000 by year's end, sparked by upward momentum in such sectors as consumer goods, retailers, and the biggest of the blue chips, such as General Electric.
Goldman Sachs's legendary market strategist Abby Joseph Cohen also sees a rejuvenated market, fueled by better-than-expected corporate profits plus continued economic expansion.
"Interest rates and inflation remain low," says William Barker, strategist for financial firm Dain Rauscher, in Minneapolis. He believes that while the market is now in a "normal correction" of between 5 and 10 percent, it should show more sizzle after June.
Small investors, say market watchers, should follow the big boys - the investment house strategists. Look for selected companies with solid market share, the promise of continued growth, and better-than-expected corporate profits, says analyst Hildegard Zagorski, of Prudential Securities.
The best approach, adds Robert Froehlich, chief investment strategist for Scudder Kemper Investments Inc., in Chicago, is a disciplined investment pro-gram. Such a program rests on two elements: dollar-cost averaging - investing a set amount on a consistent monthly basis - and then sticking with it.
Mr. Froehlich believes that the market will break upward after mid-July, as companies start reporting higher-than-expected profits. "Everything right now is about corporate profits," he says. Once profits start to look promising, the market will perk up, he says.
Some analysts, including Sheldon Jacobs of the No-Load Fund Investor newsletter, emphasize diversification in the face of uncertainty - a mix of stocks, bonds, and cash.
Finally, have a battle plan just in case there's a downturn of 20 percent or more. Few analysts on Wall Street expect such a bear market, but bear markets never show up when they're expected.
If the bear arrives, experts suggest shedding laggard stocks or funds in favor of a money-market account. And prepare a list of funds or stocks you would buy if their prices fell sharply.
Finally, make certain your asset allocation plan - your own mix of stocks, bonds, and cash - is where you want it to be, experts agree. You should have a plan that gives each category a certain percentage, and it might need adjusting.